can anyone tell me if you purchase under a company and you are the guarantor, would it still affect your personal borrowing capacity. I have been told it doesnt affect it, but want to find out more…
thxgianni
gianni
Never buy an appreciating asset in a company name unless the company is the trustee for your trust.
Company tax is always 30%, and have no CGT concessions, it is not the best structure to purchase in.
As for how it affects borrowing, my understanding is that it depends on the type of trust you have and how the funds are borrowed.
I am sure Stuart or Steve can shed some more light on it for you.
Cheers
Leigh K[
]Read, learn, grow but most of all just do it.
Hi Gianni,
I must say I’m with Enjo Lady on this one. You will miss out on the 50% Capital Gains Tax concession if your IP is in a company name.
Perhaps check with your accountant, or you could benefit by reading Steve McKnight’s WEALTH GUARDIAN. It’s about structuring your IP’s to give you asset protection and minimize tax. It is very easy to understand, even for a lay person.
Good luck,
Del
This is covered in my next “Unlimited Finance” article.
Yes, providing a guarantee does affect your borrowing capacity and is recorded on your credit file. Extract from article:
Some people are under the misconception that providing a guarantee does not affect your borrowing capacity. By providing a guarantee you are essentially promising that you will meet all mortgage obligations should the borrowing entity (i.e. the Trust or Company) not fulfil these requirements. When assessing the strength of a guarantee, the lender will consider the strength of a guarantor including credit worthiness and financial position. This financial position assessment will include an assessment of actual and contingent (such as other guarantees) financial commitments. A lender needs to satisfy itself that should the applicant/s not fulfil its obligations, the guarantor has the financial capacity to fulfil all mortgage obligations on behalf of the applicant. The lender therefore, will complete the same detailed credit assessment for guarantors as they do for the applicants themselves. This disabuses the notion that providing a guarantee does not affect your personal borrowing capacity.Therefore, there is no advantage to an investor from borrowing through a trust or company structure from a finance perspective (where a guarantee is provided).Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auFor what its worth, I completely agree with Stu.
Terryw
(Mortgage Broker)Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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